Hi, Doc. Good morning, everyone. Welcome to our next session. I'm Ben Budish, Barclays analyst covering the U.S. Brokers, Asset Managers, and Exchanges. For this chat, we've got Scott Kleinman, Co-President of Apollo. Scott, thanks so much for being here. Welcome.
My pleasure, Ben. Thanks.
Maybe just to start out, you know, to level set, you have an Investor Day coming up on October 1st. You know, at your last Investor Day, I think in 2021, you gave us 2026 targets. And while I appreciate you may not preempt your own Investor Day by giving some guidance right here, how should investors be thinking about what you might be getting ready to message?
Yeah, no, that's right. So three years ago, we did our last Investor Day, where we put out, you know, five-year financial targets, as well as just some of the strategic building blocks that it was going to take, we were building out in order to get to that five-year mark. So this time around, we're going to, of course, you know, judge ourselves against those original metrics, put out some new five-year targets, and also talk about some of the new building blocks. How are we using the things that we've built over the last several years to now scale to the next level? What are the new opportunities? What are the new strategic goals that we have? And so, should be an incredibly enlightening day.
You know, invite you all to come or at the very least, tune in, and pretty excited about it.
Great. Let's talk a little bit about origination. You kind of theme a fixed income replacement. I expect a lot more on this in October as well. You know, growing your proprietary origination capacity is clearly central to your longer-term growth algorithm. You know, how should investors be thinking about the evolution of your broader origination ecosystem over the next several years? And to kind of maybe help everyone kind of frame up their models, you know, can you remind us how Apollo monetizes these assets?
Yeah, sure. So three years ago, when we really first started talking about origination, in our Investor Day, we were running at about $80 billion a year. Today, LTM, we're close to, well, a little bit north of $140 billion. We had put out a five-year target of $150 billion, so we're obviously well ahead of that, and, you know, we'll provide some new guidance on where that's going. But as you can imagine, it's probably substantially north of that number. I think, you know, we've been very clear, very repetitive on the point that, you know, the single most important factor for an alternative asset manager is origination capacity, right?
That is the single biggest constraint on growth, not capital formation, not how many people you have. It really is built around, can you originate enough attractive assets to meet your needs? And that's why we have been so focused. In fact, you know, some might say maniacally focused on really making sure we are building the right type of origination in the right volumes, looking for the right new places to be doing that, because our whole business is about delivering excess return per unit of risk. And if you're just reliant on secondary trading, you know, picking up stuff, you know, off of a bank trading desk or a brokered, you know, situation, you're losing a lot of that excess return, that excess alpha.
And for us, in the long run, the best predictor of success is being able to continue to grow and scale attractive origination. To answer the second part of your question about how does the economics work? You know, there's no one standard transaction, but in a perfect world, you've heard us say, you know, for our own balance sheets, we want to own 100% of nothing and 25% of everything. And we really mean that, right? So in a perfect world, we originate a new transaction, a new loan. 25% of that would go to our own balance sheets.
About 50%+ would go to client, you know, pools of capital, and 25% would go to syndication, to, you know, market participants that we can syndicate. And, you know, just to think about the math that follows from that, on the 25% that stays with Apollo, that's SRE income plus FRE income. For the 50% that goes to client funds, that's FRE income. And for the 25% that gets syndicated, that's our ACS, you know, fees. And so, it's pretty attractive to be able to do that. And the reason we do want ACS in there is to really, it's just a great flywheel. It really allows us to take down whole transactions, even if we don't want the whole thing or don't have capacity for the whole thing.
Because when you take a whole transaction down, you can dictate terms better, you can get better outcomes, better structure, better documentation. And then having the knowledge and the comfort that you're going to be able to move the remainder of what you can't consume internally, or for your clients, is really valuable.
Great. And so how should investors think about the growth outlook for that, you know, very unique, high-grade corporate solutions business? What does the universe of potential transactions look like? You know, can you talk about maybe the deal you did with Intel over the summer? What's the current state of the pipeline for that sort of opportunity?
Sure. You know, that's totally massive. Totally massive, right? So when you think about the Intel transaction as an example, but really it's our high-grade capital solutions, you know, private IG is another way to think of it. We're in a world now where for the extended foreseeable future, companies just have an unprecedented level of capital they need to spend. So whether it's on de-globalization, so rebuilding the industrial infrastructure, you know, in new countries, new places, the decarbonization that's going on, the digital infrastructure and digitization of just about everything that has to be built and the whole supply chain for that, right? These are massive, massive, you know, hundreds of trillions of dollars over the next 20 years.
And companies just don't have the internal capital to be able to do that, and they don't even have the ability to just borrow all that in the traditional, you know, debt markets. If you're a big IG company, right, historically, you really only have two sources of capital. You have your bank debt or IG bonds, right? Which are, you know, I'd say, very low cost, but very rigid. You know, they're fairly inflexible. They, you know, have a certain indenture. They have to be out of certain rated boxes, et cetera, et cetera. Or you have equity, right? And equity is super flexible, but often very expensive. And these big IG companies haven't had something in the middle in any meaningful way in the past.
And so, our ability, because of our scale, combined with our cost of capital, our ability to approach you know, a big IG company for a few hundred basis points more than their IG bonds and be able to deliver in size, $5 billion, $10 billion, you know, even more, $15 billion, $20 billion dollars at a clip, where we can speak for the whole thing, take it down one-on-one, sort of bilaterally, negotiate a package that makes sense for the company to meet certain needs. That's incredibly attractive. And you know, big companies, big blue chip companies are actually starting to pay attention and focus on this, because they've never had the ability. They've never had the need to do it in the past, and they've never really had the ability to do it.
And so, you're just, you know, this was, you know, Intel was a marquee transaction. We've had a number of other, you know, big transactions this summer. I think you're gonna continue to see more and more of this. It's an incredibly attractive product for both the issuer, the company, as well as for us and our investors.
Great. Maybe moving over to the LP side. So you've talked about an opportunity under the fixed income replacement kind of umbrella to serve your traditional LPs, not just on the alternatives bucket, but on the fixed income side. Where are we in this evolution? Any anecdotes from initial conversations with clients you can share? And then can you kind of help us size a TAM for this opportunity set, which is, you know, different from the traditional or alternatives kind of landscape we typically think about?
Yeah. Yeah. So fixed income replacement. Fixed income replacement is kind of a concept that isn't talked about fairly regularly, but it's something you're gonna hear more and more coming from us. So what is that? Right. Fixed income replacement is really just the realization that the historic model of public versus private, right, is might have made sense 20 years ago, doesn't make sense today. There was this historic belief that, you know, public is liquid, and therefore public is safe, private is illiquid, and therefore unsafe. And that was a simple heuristic that CIOs used, and they split their books up that way in the past, and managed their risk that way. But a couple of things have happened.
You know, one, you know, over the last decade, it's become pretty clear, and certainly over the last couple of years, we've seen numerous examples where public isn't so liquid, right? It's liquid on the way up, but on the way down, it's actually incredibly illiquid. Telling a fixed income manager you can have liquidity 10 points down is not liquidity, right? And you saw that whether it was the LDI crisis, you know, Treasury, like, you've seen huge moves like that in the market in relatively short order. On the flip side, private, the market for private credit products, private fixed income, is starting to grow to a scale where there is real, you know, liquidity or certainly more liquidity than was perceived. And over time, you're going to see more and more.
We're certainly moving in a direction where, you know, I can envision a day in the not-too-distant future where Apollo makes a market in all of the privately originated credit that we produce. And great, you'll get a bid, you know, anytime, anywhere, and eventually that liquidity differential between public and private will completely evaporate. Now, you'll still get this premium, but what are you giving up? So folks were giving up this premium, this 150, 200, 250 basis point premium, right, in order for to maintain this perceived belief in liquidity that actually is proving not to be there. So we see this convergence happening. This convergence is happening first in fixed income. Eventually, it's gonna happen in other markets.
But as we spent the last decade utilizing these techniques to really scale and win at Athene, at our own balance sheet, which, by the way, requires 90%+ investment grade. So we've had to find ways to create additional spread, additional alpha for our own balance sheet. It dawned on us that if it's good for us, it might be good for others. And so other third-party insurance companies have definitely started embracing this. And now we're starting to make headway into more traditional fixed income investors, you know, pension funds, sovereign funds, and otherwise. And, you know, we've now productized different products so that that's consumable for traditional credit investors. So the answer is, we're on our way. This is going to be a, you know, a long journey, but the TAM is massive.
There's a $40 trillion fixed income market. Will 100% of it be private credit? No, but a meaningful. I mean, you look at our own insurance balance sheet, and probably, you know, a third of that book is private IG, if you will. That's incredibly, you know, realistic, you know, over time.
Got it. Very interesting. Maybe moving on to the asset management business. How would you describe the current deployment environment? Where are you finding the most compelling opportunities? And then, can you also touch on some of the longer-term themes? You know, how are you thinking about digital infrastructure, climate, you know, those sort of areas for investment?
Yeah, yeah. It's actually been a really interesting time for us to be deploying. You know, when I think about our equity-oriented businesses, we've had a really busy year. You know, on the private equity side, and we've over the last 12 months, on a number of public to private transactions, you know, you look at the S&P, you look at the markets and say, it must be a really expensive time to be deploying. But the reality is, there's a real bifurcation in the public markets, right? You have, you know, 7 or 10 stocks that, you know, really represent most of the gain in the S&P. You know, half the public companies are just sort of drifting.
You know, that there's a change going on in just the nature of the public markets, and if you're a you know, small or mid-sized public company, it hasn't been particularly fun, and because no matter what you do, you can't really attract the level of interest, and so a lot of these companies are trading at reasonable valuations and actually more interested than ever in going private, and so from that perspective, it's been a pretty interesting time to be doing transactions. I'd say the other theme, before I get to some specific industry themes, that's going on is, look, it's no secret, right? There is a massive backlog in the portfolio of the private equity industry, right?
It's been, you know, you had 15 years, 14 years of, you know, declining and 0% interest rates, which pushed valuations ever higher, allowed financing to get cheaper and cheaper, you know, and therefore, higher and higher leverage levels. So you have a, I'd say, a bloated portfolio of companies in, you know, private equity hands right now, above normal, where they would want to be on their realization curve. And these, you know, these companies or these sponsors need to find ways to monetize. Now, I'll start with the premise that most of these companies are actually really good companies, right? They are good companies. They were just paid a price for in a different valuation environment that we're probably not going back to.
And so it's been tougher to sell for a lot of these sponsors, so that means they're holding it longer. If they're holding it longer, they want to start figuring out ways to return capital back to their LPs, right? And so that could be, you know, structured investment, you know, for our hybrid business, other businesses, or it could be a situation where you're holding it longer, you have equity value, maybe not as much as you would hope, but there's equity value in there. But because of the rate environment then versus now, you have a refinancing coming up, but you have too much debt, right? So you got to pay some of that debt down in order to get to the other side to unlock that equity value. Again, a perfect example for hybrid-type investments, structured investments, to be able to come in.
And so we're having numerous dialogues. We're doing deals that really allow sponsors to either return capital to their LPs or de-leverage in order to get a refinancing done. And so that's been, you know, an incredibly active theme, and that's regardless of where rates go over the next, you know, six, nine, 12 months, right? They're not going back to zero, right? They're going down, you know, 50, 100 , 150 basis points. It's still not going to change the fundamental valuation environment and the leverage environment for a lot of these companies. And so that's the opportunity set. As far as some of the macro themes around, yeah, decarbonization, you know, de-globalization, you know, these are, and digitization, right?
These are huge themes that we are investing behind across our entire platform. Our infra business, our climate business, our private equity business, our private lending business, all of this is really lining up thematically behind a lot of that because, like I said earlier, so much capital is required, you know, to support these trends.
Got it. Maybe kind of similar topic, deployment, and let's talk about capital solutions for a minute. You know, the business reached a new record in the second quarter. It seems like deal activity has picked up since then. You know, how's the back half of the year shaping up? And how do you think about the potential of this business to keep scaling over the next few years?
Yeah, well, you're right. Q2 was a really particularly great quarter for our ACS business. I think the back half of the year, as we've you know publicly predicted, will be a more normalized level. But again, going back to that Investor Day from three years ago, you know, we were running a capital solutions business of around $250 million a year. We predicted $500 million by year five. We achieved that last year. This year, we've indicated a number around $600 million. And again, I hate to be a broken record, but you'll see in a few weeks at our Investor Day a new set of forecasts that show you where we think that business could go.
But again, spoiler alert, it's gonna be substantially higher than it's running at today. Fundamentally, as we continue to grow the types of assets that we're originating, the volume of assets that we're originating, expand our syndication capabilities, this will fundamentally continue to grow in a pretty meaningful way, and in a very repeatable way. That $600 million I referenced, that represents a couple of hundred transactions. You know, that is. Yeah, there are a few big transactions that might pop you up in any one quarter, but the steady progression of just the volume of the business moving through is just a pretty interesting stair step to see. So, you know, we see more and more of that.
You know, the only other thing I'll say about ACS, and we'll talk a little bit more about this in Investor Day. This room, this crowd, focuses on it for its revenue potential. From my standpoint, the most powerful thing about our ACS business and what we've built there is the flywheel effect of you know the client bringing in new clients, right? We have many, many clients that started out just as, you know, we sold them a piece of a transaction. We syndicated a piece of a loan to them, then we did it again, and then we did it again.
Then they said, "Well, this is really interesting stuff. You guys are producing interesting stuff. Can I get an SMA? Or what type of funds do you have? Maybe I can put some more data, so I get a more regular flow of this." And we've converted many, many clients from a transactional client to a fund fee-paying client. And that is really the power of this ACS machine that allows us to continue to expand the type of clients we would touch, and over time, bring them in as more recurring clients.
Got it. Maybe one last question on the asset management business. So traditional private equity is, you know, seems to be less of a key growth driver. Your performance there has been quite good. You know, how should we think about the evolution of that franchise and maybe some of the newer equity adjacent franchises, you know, longer term within Apollo?
Yeah, well, look, we're nothing if not consistent, and our philosophy of a value-oriented investment strategy has really stood the test of time, and so our private equity business, I think is, as you rightly point out, the performance there has been quite good, because we've stayed true to that value orientation, and we're not suffering a lot of the pain that I think the industry is or maybe hasn't admitted yet, but will be suffering, as a result of kinda chasing a, you know, too much of that growth at any cost, over the last several years. I'll admit it was sort of lonely in the wilderness for decades staying true to that value orientation, but it has served us really well.
As we pushed into adjacent strategies, you know, that theme of value orientation carries through. And so, in the last five years, we've started a number of businesses, infrastructure, climate, secondaries. Hybrid is started a little bit before that, and that's now, you know, in, I'd say, the medium stages. But a lot of these earlier businesses, we are huge believers in. But, you know, it takes a decade to grow a franchise, and we are, you know, we've put the investment in, we've put the time in. We're now at fund, you know, two and fund three of many of these things. And I think you'll see, you know, we'll lay out some very specific thoughts on what that looks like at Investor Day.
But we're, y ou know, the next five years, we will be reaching the fatter part of that curve. So pretty excited about it. And from a timing standpoint, you know, sometimes better to be lucky than smart. But you know, things like infrastructure and climate, everything we've been talking about all morning, right, is pointing towards the need for more capital there. So we're feeling pretty good about that.
Great. Now let's move over to the private wealth side now. Maybe just to start, can you give us a bit of an overview of your semi-liquid retail products, how your offerings are differentiated from your competitors, and maybe what other strategies are you looking to bring in the next couple of years?
Yeah. Yeah. So again, this is one of the building blocks, one of the key building blocks that we pointed out three years ago that we were gonna go build. I mean, three years ago, we had virtually no wealth business to speak of. We had just gotten into that, into that business. We've invested extensively in this. This is truly a huge opportunity, and we can talk a little bit about that in a second. But I think at this point, it's well understood by the marketplace, just how fundamentally game-changing, you know, the wealth market can be for alternatives.
And I would say in these last three years, you know, we've added, you know, close to probably 200 people who spend most or all of their time in the wealth space, you know, in some form or fashion in the distribution of wealth. That is a huge investment, a huge undertaking. And as a result, this is not, you're not gonna see 100 companies, 100 alternative managers that can enter and be active and be meaningful in this space. The upfront investment is just so massive in order to do that. So I think you'll see, you know, under a dozen companies, you know, really sort of dominate the alternative wealth space. And really, you have three or four, like any industry, right?
Three, four, five are gonna, you know, garner the most market share, you know, in that. It's our objective to be top three in pretty much every product that we operate in. And today, you know, from a standing start three years ago, today, we have 10 products in the semi-liquid category. We're selling about $1 billion a month across. We think we have a pretty full lineup now across credit, real assets, infrastructure, equity. So we're pretty pleased with that. I think the pace of bringing one or two products out every quarter will probably slow down now that we have the products we want.
Now it's about pushing sell-through and really starting to get these things to scale in a much more meaningful way. And so, that's the you know that's the opportunity set, but we're pretty pleased about it. As far as I think the last part of your question, you asked some newer products or some things we're doing. Earlier this year, we launched an infrastructure product. So I guess he doesn't like what I said. We launched an infrastructure product that's you know from a standing start that will be you know approaching $1 billion by the end of the year you know in that vehicle. This summer, we launched our ABF, our asset-backed product for the wealth market. We have enormous interest in that.
That is starting to really scale in a much more meaningful way. And actually, next month, we will be breaking escrow on our secondary product. So lots of interesting stuff in the market, and I think we are only in the first or second inning of this global wealth, you know, revolution, you know, accessing alternatives.
Great. I wanna ask you a little bit more about product, but, product innovation, but maybe just for AAA, you know, you've indicated in the past you think it could be your biggest product. Can you just give us an update, investment performance, fundraising, momentum, distribution reach? Where are you with that one, specifically?
Yeah, yeah. No, AAA is going well. It's, you know, performing exactly, you know, where we said it would. I think LTM is right or a little under 11%, net, so very steady. You know, the whole premise of AAA was, you know, it'll do 8% in a bad year, 14% or 15% in a good year, but otherwise, you're not gonna see much volatility out of that. And so replicating an equity-like return, equity plus, with really a fraction of the volatility. And that's performing exactly the way we would have expected. You know, that product today, I mean, from a distribution standpoint, we're now on, I think approaching about a dozen, you know, global banks.
We're here in North America, you know, we're on distribution platforms in Europe and Asia, independent platforms. We're raising, I think, it's north of $200 million a month now, from this and sort of growing, growing pretty, pretty steadily. So feel quite good about that. Total footprints, you know, in the sort of, you know, mid to high-teens $ billion. So it's a great product, and it's, I think the attractiveness is being understood every day by more and more clients.
Great. So maybe one last question on the wealth side. So, how are you thinking about the evolution of product wrappers and structures to access, you know, a broader swath of the retail market? I think even earlier this morning, you announced or filed for an ETF with State Street. Maybe correct me if I'm mischaracterizing that. I had just a minute to look at the announcement. But maybe if you could talk about that announcement and then your kind of high-level thoughts on, you know, the evolution of product design and the wrappers.
Totally, totally. And just to, you know, you know, respond. So yeah, this morning, State Street did announce, it's, or it filed, a registration with the SEC, on a new, private fixed income product, which will include, some assets, you know, delivered by Apollo, private assets delivered, you know, by Apollo. It's in registration. I can't, y ou know, it's in the quiet period, so I can't really talk about it. But just zooming out to your broader question, this is just one example of, I think, what you're gonna see more and more of, which is other ways to deliver alternatives, other ways to deliver private assets to a broader swath of investors.
Like I was saying earlier on the fixed income replacement side, it's not just institutional investors that are figuring out that they are giving up alpha by not being, you know, in private assets, but, wealth investors want access to that too. Wealth managers want to provide that to, you know, to their clients, and you're going to see continued, ways of access. You know, everything we've been doing, you know, so far has been, you know, if you think about the pyramid, right, the ultra high net worth and the high net worth, then the qualified purchaser. Well, how do you reach that bottom layer of the mass, right? It's probably not going to be in a very meaningful way, firms like Apollo selling directly to the mass.
That's going to have to go through, other, other products, partnerships, other, you know, partnering with other, you know, long-only type manufacturers. And, there's just lots of... I mean, you can think about whether it's the DC and 401(k) market, whether it's the long only, you know, fund market, ETF market. These are all ways that I think you're gonna see over the next few years, just more and more products, pushing into that to, on the fixed income side, because that's where it's easiest, but eventually on the equity side as well, where, you're gonna find, investors having more and more interesting ways to access private assets. Just, you know, by way of, you know, this concept of convergence, and you're gonna hear us talking about this convergence more and more.
I talked about the fixed income convergence. Just think about equity and equity convergence, right? You've got, over the last 20 years, 8,000 public companies going to 4,000 public companies, right? You have, you know, the S&P being dominated by a smaller and smaller. You're trying to create a diversified, you know, basket of stocks through an ETF or something, but you're really just getting more and more concentrated. You have active managers who have struggled to beat their indexes for a long period of time. Public companies, all public companies in the U.S. represent less than 15% of employment, 15% of GDP, right? You're not getting a representative swath of the economy. Private companies, and finding ways to access private companies, not necessarily as private equity, right?
Because that is a levered, higher return, higher risk strategy, but finding ways to access private companies in a thoughtful way, for the public consumer, is definitely, you're gonna see that, you know, over the next, you know, three, four, five years, more and more ways to be able to do that, so you have that on the fixed income side, you have convergence on the equity side. This is all coming, and whether it's the State Street, you know, structure or others, you're just gonna see more and more, access points, if you will, you know, through different creative structures, to allow individual investors to access that.
Great. Well, we're talking about retail. Let's pivot over to Athene, perhaps. So how should we think about the potential inflow profile in 2025 versus the $70 billion target for 2024? You know, retail makes up the largest portion of that. And then retail, specifically, can you talk about increasing competitive pressures on the annuity side? You know, the extent to which a declining rate environment might impact demand. What are your thoughts there?
Yeah. Yeah, yeah, yeah, and you know, sorry about the broken record again, but you're gonna see a lot of detail on this in a few weeks as we really roll out our forecast for Athene and where that's going, and some bridges of how you get there. I will say, though, at a high level, right, you know, Athene has been growing, you know, double digits for the last decade. The last two years, we actually had insanely strong growth, you know, 20%-30% type growth, which is abnormally high for, you know, for this industry. But fundamentally, you know, annuities are an attractive product for retirees, for savers, and it's only becoming more and more so.
The need for guaranteed income, the need, for, you know, safe, recurring income is only growing. The shift in rates, the massive shift in rates did bring a whole bunch of new entrants into the, y ou know, meaning consumers, policyholders, into the annuity environment. We've just seen when a consumer enters the annuity environment, they stay there. You know, even as these things roll off, they'll keep those dollars in the annuity space. And so it is, it is pretty clear to me that the annuity market continues to grow pretty handsomely, that Athene continues to grow share in that annuity space, whether it's through adding, you know, continuing to add selling agreements with more and more, banks and other channels, and then selling through.
You know, it takes several years to ramp up to sort of full scale through a particular wealth distribution system. So we see a lot of runway ahead of us from, you know, from that standpoint and feel pretty good about it.
Maybe just thinking about growth, can you unpack a little bit about the opportunity in Japan, how that opportunity has evolved? It's become a, you know, increasingly prevalent talking point from Apollo. How much could it eventually contribute to Athene, and maybe what's kind of driving the evolution in that market?
Yeah, yeah. Look, I mean, the need for, you know, attractive excess spread, safe yield exists everywhere, right? And Japan is sort of the poster child for that. And so we started pushing into that market a few years ago. Today, you know, we're up to about, you know, $7 billion. I think last year it was about $7 billion of reinsurance into the Japanese market. You know, that we see that, you know, over the next several years, growing to $10+ billion , you know, just keep growing. There's, you know, just, like I said, a real need for this, for this type of, you know, safe return in Japan, and nothing, from our mind, is gonna really slow that down.
Got it. Maybe just talking about the balance sheet side, thinking about credit risk. So one of the fears we hear from investors is that directly originated private credit on insurance balance sheets hasn't been properly tested in a cycle. How would you respond to that concern? How do you think about the performance of Athene's balance sheet, you know, could look like in a more severe credit cycle? How much of the balance sheet, I think you mentioned earlier, it's about a third directly invested in Apollo private origination assets. Is that the right, you know, kind of way to think about what it looks like in the future, too?
Yeah. Yeah. So, you know, a lot of this comes from, well, private credit. Is private credit risky? Is private credit not risky? You know, first up, the thing to remember for Athene, 95% of Athene is fixed income. 90% of that is IG fixed income. So Athene's got a predominantly 90% IG balance sheet, right? Which, okay, you can start. That doesn't mean nothing bad can happen, but it's not the type of private credit that, you know, you read about, some crazy loan originated by so and so that has all these PIK features and this and that, and whatever. This is IG. Secondly.
I mean, we Apollo built the entire sort of asset side of that balance sheet, so we know, you know, everything that's on that balance sheet, and you know, have been very whether it was directly originated. And in total, when you include also include some other asset classes, about a little less than half, so about 45% of Athene's balance sheet is originated product from Apollo. The other, you know, a little more than half is a secondary product that our traders, our asset managers, put on the balance sheet. So again, we understand, you know, the credit profile of that balance sheet very well. We've had a couple of tests along the way.
Yes, we haven't had a GFC yet, but you know, the 2020 COVID crisis, you know, was a great little snapshot, you know, at least for a month, you know, as to what that could look like. You know, we came through that with flying colors. Obviously, when rates moved 500 basis points over the course of a year, that put pressure on a lot of other people's balance sheets. You know, we knew exactly what we had. So again, feel you know, incredibly good about the strength of the credit profile of the Athene balance sheet. But you're not the first person who's made that comment to me .
Maybe one last question on the Athene side. So can you talk, you know, the financial side, can you talk a bit about the guidance revision from the last quarter? You know, what kind of gives you confidence that you can return to, you know, low double-digit SRE growth in 2025 ? Again, I'm sure we'll get more details come October, but how should investors be thinking about, you know, the potential to kind of return to that growth profile that you've indicated?
Yeah. Yeah. Look, as I alluded to a couple of minutes ago, the annuity market, you know, continues to grow, continues to be, you know, very robust. Athene continues to take share in that market. The. You know, in addition to that, new product development, which we'll detail on Investor Day, whether that's pushing into DC, you know, Altitude, you know, other products that, you know, guaranteed lifetime income products. You know, there's a lot of top-line building blocks that we're pushing towards. Obviously, we're heading into a rate down environment. What that is, I mean, I'm not going to predict. Feels once again, like the market's ahead of itself, but on what it might be.
But regardless, you know, the two things to sort of to significantly mitigate that. One is, we took a bunch of pain this year to put on a massive amount of hedges to really, you know, protect ourselves from future, you know, future rate down. And I would say secondly, there's enormous management actions that you're able to take, you know, in a well, in a rate up environment, but then differently in a rate down environment. And as you know, the ability to reposition your book to, you know, take gains, use those gains to make reinvestments, like there's just a lot of levers to pull, if you will, in the system to be able to drive back to that historic trajectory of double-digit growth.
We feel, you know, we feel pretty comfortable about that.
Great! Well, we're just about out of time, so we'll have to leave it there. But, Scott, thanks so much for being with us, and looking forward to seeing what else you have for us, come October 1st.
Great. Thank you so much. Yeah.